|By Business Wire||
|May 9, 2014 03:10 AM EDT||
The Executive Chairman of Telefónica (NYSE:TEF) (LSE:TDE), César Alierta, emphasised that “our performance in the quarter was in line with the targets set for the year. First quarter results show visible progress in the execution of the strategy announced for 2014, based on further reinforcing the differentiation of our products and services through a non-replicable infrastructure. In this sense, we are making significant investments, accelerating our network modernization”.
- The Company reaches a leverage ratio of 2.30 times OIBDA after having reduced its net debt by 2,657 million euros in the first quarter to bring it down to 42,724 million euros.
- The Company’s earnings grew organically (+1.5%) for the fourth quarter running to stand at 12,232 million euros at 31 March 2014. It is worth highlighting the growth of our mobile data earnings (+8.8%), which represent 40% of total mobile revenues, and the strong growth of our high-value client base, coming from mobile contract (+9%), smartphone penetration and also of our fibre and pay TV operations.
- OIBDA totalled 3,929 million euros and accelerates its organic growth (+0.5%) compared to the previous financial year thanks to the sustained growth of earnings and the success of the expenses control and efficiency measures implemented by the Company.
- The variation in exchange rates had an impact on our 1Q14 results by bringing year-on-year earnings growth down by 11.8 p.p. and reducing OIBDA by 11.7 p.p. Earnings were also affected by perimeter changes, especially by the sale of Telefónica Czech Republic, which brought them down by 3.1 p.p., with OIBDA falling by 3.7 p.p.
- The acceleration of our network modernization reflects in a significant organic CapEx increase (+29.5%) compared to the first quarter of 2013. Investments related with transformation and growth accounted for over two thirds of the total CapEx figure in the first quarter.
- Despite this significant organic increase of CapEx and the effect of exchange rates and perimeter changes, the Company reported a solid cash flow generation, with a relevant improving year-on-year by 796 million euros, the largest in a first quarter since 2011.
- The results reported by Telefónica Spain reflect the continued recovery of the business. Earnings show an important improvement in the downward trend in 3.7 p.p. compared to the previous quarter and an improved commercial development, mostly in fibre, pay TV and an increased preference for quality services. Movistar Fusión remained the fundamental lever for growth in Spain with a customer base of 3.2 million.
- Telefónica Brazil also continued to strengthen its leadership in the highest value segments thanks to the competitive advantage it enjoys in network coverage and quality and to the universal appeal of its commercial offerings. This translated into an organic earnings growth of 2.9% (ex-regulation) and once more highlights the Company’s net profit performance in the contract segment (1.2 million accesses) and with respect to fibre rollout, with the current figure of 1.5 million homes passed.
- Telefónica’s market financing activities during the first quarter ended it at around 5,700 million euros, meaning that the Company finds itself in a comfortable position regarding liquidity from which to tackle the next round of debt payments.
Telefónica’s 1Q14 results are in line with the Company’s internal earnings, OIBDA and CAPEX over sales estimates and therefore reiterates its operational and financial targets for the year, including the dividend. During the first three months of the year Telefónica moved forward with the implementation of its transformation strategy and operating model, the aim of which is to maximise value creation and make the most of the growth opportunities offered by the digital revolution.
According to Telefónica Chairman César Alierta, “we continue to improve our financial flexibility, posting the strongest first quarter cash flow generation in the last three years after registering a solid year-on-year improvement, despite higher investments, the negative impact of exchange rates and asset disposals. This allowed to register a further decline in net debt another quarter, bringing total reduction to around 16 billion euros over the last 7 quarters”.
In this respect, the results presented today by Telefónica reflect the improvement in the organic growth of its earnings and OIBDA thanks to the strategy of attracting high-value customers, the efforts being made to simplify its operation and cost savings. It is also worth highlighting the continued reduction of the Company’s debt level, which has fallen by 2,657 million euros with respect to December 2013 to stand, at the end of March of this year, at 42,724 million euros. Were operations subsequent to the closure of the first quarter to be included (sale of Telefónica Ireland), the debt would stand at 41,944 million euros. Therefore, at the end of March the debt ratio (net debt over OIBDA) stood at 2.30 times, and this would be reduced to 2.27 times were the aforementioned operations carried out after the close of the quarter to be included.
Regarding accesses, at the end of March they totalled 313.1 million, 1% less than one year ago, due precisely to the deconsolidation of the business in Czech Republic and to the sale of the residential business in the UK, without the effect of which they would have enjoyed a year-on-year growth of 2%.
By segments, mobile accesses increased by 3% year-on-year in organic terms to 247.5 million at the end of the quarter thanks to strong contract access growth (+9% organic), accounting for 35% of the total (+1 percentage point year-on-year). Particularly noteworthy is T. Brasil’s ongoing progress in capturing high-value customers (+28% year-on-year in contract customers, with net additions in the quarter up 70% year-on-year). Smartphone (all with a data plan attached) penetration stood at 30% at the end of March 2014 (+9 percentage points year-on-year) and retail fixed broadband accesses totalled 17.6 million, up 2% vs. March 2013 in organic terms. Pay TV accesses (3.6 million) rose 8% year-on-year, highlighting the performance of T. España (consolidating its recovery trend for the second quarter in a row) and the double-digit year-on-year growth of T. Hispanoamérica and T. Brasil.
According to César Alierta, “we are building a more sustainable growth model leveraged on higher customer satisfaction. The acceleration in the modernisation of our networks is reflected commercially in the evolution of our customer base; contract mobile accesses grew almost double-digit year-on-year underpinned by the acquisition of almost 6 million smartphone customers, doubling the figure of the first quarter of 2013 while in the fixed business, fibre customer base increased 90% year-on-year. As a result, the value of our customer base has increased due to both the improved ARPU and the higher loyalty, leading to a longer average customer lifetime”.
Apart from perimeter changes, exchange rate fluctuations, in particular the depreciations of the Brazilian reai and the Argentine peso along with the implicit devaluation of the Venezuelan bolivar, negatively impacted financial results. Thus, in the January-March period exchange rates deducted 11.8 percentage points to year-on-year revenue growth and 11.7 percentage points to OIBDA growth.
Revenue organic growth for the fourth quarter in a row
First quarter revenues totalled 12,232 million euros in January-March 2014, up 1.5% year-on-year in organic terms (-13.5% reported), posting positive growth for the fourth quarter in a row and accelerating vs. full-year 2013. Excluding the negative impact of regulation, organic revenues grew 3.4% compared with January-March 2013.
By services, mobile data revenue growth accelerated compared with the previous quarter (+8.8% year-on-year in organic terms; +7.8% in the fourth quarter of 2013), now accounting for 40% of mobile service revenues, up 2 percentage points compared with the first quarter of 2013. It is also noteworthy the performance of non-SMS data revenues in January-March 2014, improving year-on-year growth to 23.6% in organic terms and already accounting for 71% of total data revenues (+8 percentage points year-on-year).
Consolidated operating expenses totalled 8,548 million euros in the quarter, up 1.5% year-on-year in organic terms (-13.0% reported), with the pace of year-on-year growth easing for the second consecutive quarter due to strict cost control and efficiency measures, despite the high level of commercial activity.
Operating income before depreciation and amortisation (OIBDA) in the first quarter of 2014 amounted to 3,929 million euros, up 0.5% year-on-year in organic terms (-14.0% reported), with growth accelerating vs. full year 2013 and posting positive year-on-year growth for the second consecutive quarter. This performance was underpinned by sustained revenue growth and cost containment measures, along with efficiencies and synergies from the new operating model. Excluding the adverse impact of regulation, OIBDA grew by 1.9% compared with January-March 2013 in organic terms.
The OIBDA margin stood at 32.1% at the end of the first quarter, virtually stable year-on-year in organic terms compared with the same period of 2013 (-0.3 percentage points). Operating income (OI) in the first quarter of 2014 stood at 1,838 million euros, up 5.2% year-on-year in organic terms (-11.0% reported).
As a result, consolidated net income in the first quarter amounted to 692 million euros (-23.2% year-on-year; 16.6% underlying) and basic earnings per share amounted to 0.15 euros per share (-27.0% year-on-year; -20.0% underlying).
CapEx up to March totalled 1,555 million euros (-19.9% year-on-year) and included 187 million euros relating to the acquisition of spectrum in Colombia and Central America (695 million euros in the first quarter of 2013, mainly in the UK). In organic terms, investments rose 29.7% year-on-year, with more than 69% of total investments devoted to business transformation and growth.
As a result, free cash flow amounted to 339 million euros in the first quarter, the highest since 2011, posting a significant year-on-year improvement of 796 million euros.
Financing activity of 5,700 million euros in the quarter
In the first quarter of 2014, Telefónica's financing activity through bond and loan markets stood at around 5,700 million equivalent euros. This activity was mainly focused on strengthening the liquidity position and smoothing the debt maturity profile of Telefónica S.A. for the following years. Therefore, as of the end of March, the Group maintains a comfortable liquidity position to accommodate next years debt maturities. In Hispanoamérica, Telefónica's subsidiaries tapped financing markets for approximately 124 million equivalent euros in the first quarter of 2014. Also noteworthy is the 500-million-euro bond placement by T. Deutschland in January.
Telefónica maintains total undrawn committed credit lines with different credit entities for an approximate amount of 12,560 million euros, with around 11,250 million maturing in more than 12 months.
Digital Services and Telefonica Global Resources
In the new area of the Chief Commercial Digital Officer, recently established to bring digital services to the core of our businesses, we could highlighted in the B2B area, the M2M agreement signed by Telefónica with JCDecaux, the world’s leader in outdoor advertising, to bring connectivity and new digital features to a new range of smart M2M powered solutions for urban environment in Europe and Latin America; and the one reached with Tesla, an industry-leader of in-car telematics. Thus, M2M revenue grew by more than 50% year-on-year in organic terms in the first quarter.
With regards to Cloud services, revenue advanced by more than 20% organic year-on-year in the first three months of the year, gradually adding value to our offering. Information Security revenues grew slightly above 20% organic year-on-year in the quarter fueled by strong momentum in “CyberSecurity”.
It should be also mentioned some strategic investments made as the creation of “Axonix”, the first mobile Advertising exchange platform owned and powered by a mobile operator; the one reached with “Saluspot” for E-health services, which enables to offer free online health advice; and the Spanish cloud computing start-up “eyeOS” was acquired, enabling Telefónica to offer an open-source desktop virtualisation service.
In Video, within the area of Consumer, Telefónica acquired for Spain exclusive content rights in Moto GP and Formula 1. Thus, the strategic focus on fostering Pay TV growth is delivering positive results with revenues growing in organic terms by 12% year-on-year and accesses by 8% year-on-year in the quarter, and increasing market share in the main markets where the Company is present.
Additionally, in April the brand of the Digital Financial Services (“Yaap”) to be provided in Spain by the joint venture established with CaixaBank and Santander was announced. Two services will be launched in the coming months, “Yaap Shopping”, a virtual showroom helping small businesses, and “Yaap Money”, a peer to peer service that will enable people to send money from one mobile device to another.
Telefónica Global Resources continued driving the Company's technological transformation during the quarter, accelerating network modernisation and simplification, ensuring a higher quality of infrastructure and systems and enhancing the differentiation of products and services. In the global Network and Operations unit sharply accelerated the rollout of ultra-broadband infrastructure. Homes passed with fibre amounted to 5.8 million, around 80% more than in March 2013, and LTE sites deployment increased by more than 3 times year-on-year to reach more than 10,200 sites. The global IT unit is developing the Company's IT transformation strategy through: (i) consolidation, focusing on the Data Centres, technical infrastructure and corporate applications; (ii) simplification and transformation of applications; and (iii) support for transformation towards a Digital Telco.
Explosive growth in connected devices. Enormous amounts of data for collection and analysis. Critical use of data for split-second decision making and actionable information. All three are factors in making the Internet of Things a reality. Yet, any one factor would have an IT organization pondering its infrastructure strategy. How should your organization enhance its IT framework to enable an Internet of Things implementation? In his session at Internet of @ThingsExpo, James Kirkland, Chief Architect for the Internet of Things and Intelligent Systems at Red Hat, described how to revolutioniz...
Nov. 24, 2014 07:00 PM EST Reads: 1,489
P2P RTC will impact the landscape of communications, shifting from traditional telephony style communications models to OTT (Over-The-Top) cloud assisted & PaaS (Platform as a Service) communication services. The P2P shift will impact many areas of our lives, from mobile communication, human interactive web services, RTC and telephony infrastructure, user federation, security and privacy implications, business costs, and scalability. In his session at @ThingsExpo, Robin Raymond, Chief Architect at Hookflash, will walk through the shifting landscape of traditional telephone and voice services ...
Nov. 24, 2014 06:00 PM EST Reads: 874
Bit6 today issued a challenge to the technology community implementing Web Real Time Communication (WebRTC). To leap beyond WebRTC’s significant limitations and fully leverage its underlying value to accelerate innovation, application developers need to consider the entire communications ecosystem.
Nov. 24, 2014 12:00 PM EST Reads: 1,376
The definition of IoT is not new, in fact it’s been around for over a decade. What has changed is the public's awareness that the technology we use on a daily basis has caught up on the vision of an always on, always connected world. If you look into the details of what comprises the IoT, you’ll see that it includes everything from cloud computing, Big Data analytics, “Things,” Web communication, applications, network, storage, etc. It is essentially including everything connected online from hardware to software, or as we like to say, it’s an Internet of many different things. The difference ...
Nov. 24, 2014 11:00 AM EST Reads: 1,487
Cloud Expo 2014 TV commercials will feature @ThingsExpo, which was launched in June, 2014 at New York City's Javits Center as the largest 'Internet of Things' event in the world.
Nov. 24, 2014 09:00 AM EST Reads: 1,520
SYS-CON Events announced today that Windstream, a leading provider of advanced network and cloud communications, has been named “Silver Sponsor” of SYS-CON's 16th International Cloud Expo®, which will take place on June 9–11, 2015, at the Javits Center in New York, NY. Windstream (Nasdaq: WIN), a FORTUNE 500 and S&P 500 company, is a leading provider of advanced network communications, including cloud computing and managed services, to businesses nationwide. The company also offers broadband, phone and digital TV services to consumers primarily in rural areas.
Nov. 23, 2014 07:30 PM EST Reads: 1,730
"There is a natural synchronization between the business models, the IoT is there to support ,” explained Brendan O'Brien, Co-founder and Chief Architect of Aria Systems, in this SYS-CON.tv interview at the 15th International Cloud Expo®, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
Nov. 23, 2014 12:00 PM EST Reads: 1,670
The major cloud platforms defy a simple, side-by-side analysis. Each of the major IaaS public-cloud platforms offers their own unique strengths and functionality. Options for on-site private cloud are diverse as well, and must be designed and deployed while taking existing legacy architecture and infrastructure into account. Then the reality is that most enterprises are embarking on a hybrid cloud strategy and programs. In this Power Panel at 15th Cloud Expo (http://www.CloudComputingExpo.com), moderated by Ashar Baig, Research Director, Cloud, at Gigaom Research, Nate Gordon, Director of T...
Nov. 23, 2014 07:45 AM EST Reads: 1,646
ARMONK, N.Y., Nov. 20, 2014 /PRNewswire/ -- IBM (NYSE: IBM) today announced that it is bringing a greater level of control, security and flexibility to cloud-based application development and delivery with a single-tenant version of Bluemix, IBM's platform-as-a-service. The new platform enables developers to build ap...
Nov. 22, 2014 05:30 PM EST Reads: 1,496
An entirely new security model is needed for the Internet of Things, or is it? Can we save some old and tested controls for this new and different environment? In his session at @ThingsExpo, New York's at the Javits Center, Davi Ottenheimer, EMC Senior Director of Trust, reviewed hands-on lessons with IoT devices and reveal a new risk balance you might not expect. Davi Ottenheimer, EMC Senior Director of Trust, has more than nineteen years' experience managing global security operations and assessments, including a decade of leading incident response and digital forensics. He is co-author of t...
Nov. 22, 2014 05:30 PM EST Reads: 1,383
Technology is enabling a new approach to collecting and using data. This approach, commonly referred to as the "Internet of Things" (IoT), enables businesses to use real-time data from all sorts of things including machines, devices and sensors to make better decisions, improve customer service, and lower the risk in the creation of new revenue opportunities. In his General Session at Internet of @ThingsExpo, Dave Wagstaff, Vice President and Chief Architect at BSQUARE Corporation, discuss the real benefits to focus on, how to understand the requirements of a successful solution, the flow of ...
Nov. 21, 2014 08:00 PM EST Reads: 1,486
The security devil is always in the details of the attack: the ones you've endured, the ones you prepare yourself to fend off, and the ones that, you fear, will catch you completely unaware and defenseless. The Internet of Things (IoT) is nothing if not an endless proliferation of details. It's the vision of a world in which continuous Internet connectivity and addressability is embedded into a growing range of human artifacts, into the natural world, and even into our smartphones, appliances, and physical persons. In the IoT vision, every new "thing" - sensor, actuator, data source, data con...
Nov. 21, 2014 08:00 PM EST Reads: 1,434
"BSQUARE is in the business of selling software solutions for smart connected devices. It's obvious that IoT has moved from being a technology to being a fundamental part of business, and in the last 18 months people have said let's figure out how to do it and let's put some focus on it, " explained Dave Wagstaff, VP & Chief Architect, at BSQUARE Corporation, in this SYS-CON.tv interview at @ThingsExpo, held Nov 4-6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
Nov. 21, 2014 07:00 PM EST Reads: 1,347
Focused on this fast-growing market’s needs, Vitesse Semiconductor Corporation (Nasdaq: VTSS), a leading provider of IC solutions to advance "Ethernet Everywhere" in Carrier, Enterprise and Internet of Things (IoT) networks, introduced its IStaX™ software (VSC6815SDK), a robust protocol stack to simplify deployment and management of Industrial-IoT network applications such as Industrial Ethernet switching, surveillance, video distribution, LCD signage, intelligent sensors, and metering equipment. Leveraging technologies proven in the Carrier and Enterprise markets, IStaX is designed to work ac...
Nov. 20, 2014 09:15 PM EST Reads: 1,409
C-Labs LLC, a leading provider of remote and mobile access for the Internet of Things (IoT), announced the appointment of John Traynor to the position of chief operating officer. Previously a strategic advisor to the firm, Mr. Traynor will now oversee sales, marketing, finance, and operations. Mr. Traynor is based out of the C-Labs office in Redmond, Washington. He reports to Chris Muench, Chief Executive Officer. Mr. Traynor brings valuable business leadership and technology industry expertise to C-Labs. With over 30 years' experience in the high-tech sector, John Traynor has held numerous...
Nov. 20, 2014 06:00 PM EST Reads: 1,364
The 3rd International @ThingsExpo, co-located with the 16th International Cloud Expo - to be held June 9-11, 2015, at the Javits Center in New York City, NY - announces that it is now accepting Keynote Proposals. The Internet of Things (IoT) is the most profound change in personal and enterprise IT since the creation of the Worldwide Web more than 20 years ago. All major researchers estimate there will be tens of billions devices - computers, smartphones, tablets, and sensors - connected to the Internet by 2020. This number will continue to grow at a rapid pace for the next several decades.
Nov. 20, 2014 01:00 PM EST Reads: 1,620
The Internet of Things is not new. Historically, smart businesses have used its basic concept of leveraging data to drive better decision making and have capitalized on those insights to realize additional revenue opportunities. So, what has changed to make the Internet of Things one of the hottest topics in tech? In his session at @ThingsExpo, Chris Gray, Director, Embedded and Internet of Things, discussed the underlying factors that are driving the economics of intelligent systems. Discover how hardware commoditization, the ubiquitous nature of connectivity, and the emergence of Big Data a...
Nov. 20, 2014 12:30 PM EST Reads: 1,816
Almost everyone sees the potential of Internet of Things but how can businesses truly unlock that potential. The key will be in the ability to discover business insight in the midst of an ocean of Big Data generated from billions of embedded devices via Systems of Discover. Businesses will also need to ensure that they can sustain that insight by leveraging the cloud for global reach, scale and elasticity.
Nov. 18, 2014 09:00 PM EST Reads: 2,033
SYS-CON Events announced today that IDenticard will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. IDenticard™ is the security division of Brady Corp (NYSE: BRC), a $1.5 billion manufacturer of identification products. We have small-company values with the strength and stability of a major corporation. IDenticard offers local sales, support and service to our customers across the United States and Canada. Our partner network encompasses some 300 of the world's leading systems integrators and security s...
Nov. 18, 2014 08:15 PM EST Reads: 1,602
IoT is still a vague buzzword for many people. In his session at @ThingsExpo, Mike Kavis, Vice President & Principal Cloud Architect at Cloud Technology Partners, discussed the business value of IoT that goes far beyond the general public's perception that IoT is all about wearables and home consumer services. He also discussed how IoT is perceived by investors and how venture capitalist access this space. Other topics discussed were barriers to success, what is new, what is old, and what the future may hold. Mike Kavis is Vice President & Principal Cloud Architect at Cloud Technology Pa...
Nov. 18, 2014 01:30 PM EST Reads: 2,026